Hire Purchase (HP) is a means of acquiring a piece of equipment, vehicles or other assets over a period of time. As such it is the oldest form of financial purchase agreement.
In the case of a hire purchase contract the ownership of the asset (title) remains with the HP Company during the period of the contract and transfers to the business at the expiry of the finance term.
Hire Purchase Agreement
HP is a sensible option where payment in full is not suitable and where cheaper forms of credit are not available. Businesses may also find that using an HP agreement to acquire assets has an advantage compared with a leasing agreement with regard to the effect on the Balance Sheet. Goods being acquired under an HP agreement can be shown as assets on the balance sheet. There may also be a marginal advantage as far as taxation is concerned, but professional accounting advice should always be sought on this.
BFS can help to find the most suitable provider of HP terms for your business.